Regardless of the organizational form, we must strive to design a housing financing system that ensures the successful funding and securitization of mortgages during times of financial stress, Bernanke said.
“Regardless of the organizational form, we must strive to design a housing financing system that ensures the successful funding and securitization of mortgages during times of financial stress”, Bernanke said.
The public purpose of the GSE portfolios has not been fully clarified, and systemic risks will remain as long as the portfolios remain large, he criticized. Also, recent legislation does not fully resolve the fundamental conflict between private shareholders and public purpose that is the source of many concerns about the GSEs, he said.
“Looking beyond the immediate concerns the conservatorships of Fannie Mae and Freddie Mac can usefully be viewed as a ‘time out’“, Bernanke said, which may give the opportunity to reconsider the appropriate roles of Fannie and Freddie in the U.S. mortgage market.
“Considering some alternative forms for the GSEs - or for mortgage securitization generally - during this "time out" thus seems worthwhile”, he said. However, the U.S. government's strong and effective guarantee of the obligations issued under the current GSE structure must be maintained, he underlined.
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